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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Coca-Cola Enterprises Inc was -1.94. The lowest was -4.69. And the median was -2.62.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Coca-Cola Enterprises Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.0665||+||0.528 * 0.9698||+||0.404 * 1.0219||+||0.892 * 0.8594||+||0.115 * 1.1373|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0618||+||4.679 * -0.0415||-||0.327 * 1.0061|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,352 Mil.|
Revenue was 1517 + 1630 + 1822 + 1928 = $6,897 Mil.
Gross Profit was 560 + 600 + 697 + 705 = $2,562 Mil.
Total Current Assets was $2,294 Mil.
Total Assets was $8,006 Mil.
Property, Plant and Equipment(Net PPE) was $2,000 Mil.
Depreciation, Depletion and Amortization(DDA) was $269 Mil.
Selling, General & Admin. Expense(SGA) was $1,732 Mil.
Total Current Liabilities was $2,450 Mil.
Long-Term Debt was $3,518 Mil.
Net Income was 66 + 156 + 168 + 176 = $566 Mil.
Non Operating Income was -2 + -1 + -4 + -1 = $-8 Mil.
Cash Flow from Operations was 123 + 152 + 428 + 203 = $906 Mil.
|Accounts Receivable was $1,475 Mil.
Revenue was 1631 + 1925 + 2136 + 2333 = $8,025 Mil.
Gross Profit was 568 + 669 + 808 + 846 = $2,891 Mil.
Total Current Assets was $2,517 Mil.
Total Assets was $8,190 Mil.
Property, Plant and Equipment(Net PPE) was $1,957 Mil.
Depreciation, Depletion and Amortization(DDA) was $305 Mil.
Selling, General & Admin. Expense(SGA) was $1,898 Mil.
Total Current Liabilities was $2,390 Mil.
Long-Term Debt was $3,678 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1352 / 6897)||/||(1475 / 8025)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(600 / 8025)||/||(560 / 6897)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2294 + 2000) / 8006)||/||(1 - (2517 + 1957) / 8190)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(305 / (305 + 1957))||/||(269 / (269 + 2000))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(1732 / 6897)||/||(1898 / 8025)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((3518 + 2450) / 8006)||/||((3678 + 2390) / 8190)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(566 - -8||-||906)||/||8006|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Coca-Cola Enterprises Inc has a M-score of -2.74 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Coca-Cola Enterprises Inc Annual Data
Coca-Cola Enterprises Inc Quarterly Data